VAT Ruling No. 048-92

March 31, 1992 VAT RULING NO. 048-92 NIRC Sec. 100 (a) 102 (a) Precedent Ruling 000-00 Southeast Asian Regional Center For Graduate Study And Research In Agriculture (SEARCA) 4031 College, Laguna Attention: Mr. Arturo A. Gomez Director S i r s : This refers to your letter dated October 7, 1991 requesting confirmation of your opinion that the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) is exempt from VAT under Sec. 102(a)(3) of the Tax Code, as amended. It is represented that the SEARCA was established in 1968 by the Southeast Asian Ministers of Education Council (SEAMEC) in a Letter of Agreement between SEAMEC, the Government of the Philippines and the Government of the United States; that tax exemption privileges were granted by the Philippine Government to SEARCA as provided under Republic Act No. 6450 and extended under Presidential Decree No. 1171, to wit: ". . . (SEARCA) and its grantees, shall be exempt from the payment of gift, franchise, specific, percentage, real property, exchange, import, export, and all other taxes, duties and fees provided under existing laws and ordinances: Provided , That this exemption shall extend to goods imported and owned by SEARCA . . ." and that the Philippine Government appropriates funds for the maintenance and other operating expenses of said entity under the General Appropriations Act (Republic Act No. 7078). In reply, please be informed that this office hereby confirms your organization's exemption from the Value-Added Tax on activities that it directly undertakes. This implies that such exemption privilege does not extent to the VAT and other taxes, which may be passed on to you by your suppliers of goods and services. The term "effectively zero-rated sale" under Sec. 100(a)(2) and 102(a)(3) of the Tax Code, as amended, refers to exemptions granted under special laws or international agreements which are extended not only to the grantee but also to its suppliers of goods and services; which under your case does not apply. Such being the case, SEARCA is subject to the 10% VAT that may be passed on to it by the suppliers of goods and services under Sec. 100(a) and 102(a), NIRC, utilizing funds appropriated by the Philippine Government for its maintenance and other operating expenses. However, if you directly import goods, your importations are exempt from VAT under Sec. 101 of the same Code since the importer is directly liable for the VAT due. TDCAIS Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue